Equity markets trim gains to trade flat

Indian equity markets trimmed their initial gains and were trading flat in late morning session. Investors turned cautious with SBI’s Ecowrap report stating that India’s current account deficit is expected to widen to 2.5 percent of the Gross Domestic Product (GDP) in the financial year 2018-19, on the back of rise in the crude oil prices. Markets continued to be under some pressure with report stating that private banks have witnessed a massive jump in bad loans. There has been a 450 percent jump in gross NPAs of private banks as figures showed bad loans rose from Rs 19,800 crore at the end of financial year 2013-2014 to Rs 109,076 crore at the end of March 2018. Investors took note of report which showed that foreign institutional investors (FIIs) sold shares worth a net Rs 496.03 crore on May 21, 2018. Besides, selling was witnessed in Oil & Gas, Energy and IT stocks.

However, markets managed to trade above the neutral line as traders took some relief with ICRA’s report stating that the GDP growth rate is expected to improve to 7.4% in Q4 FY2018 from 7.2% in Q3 FY2018, exceeding the implicit forecast of 7.1% embedded in the CSO’s Second Advance Estimate of National Income for 2017-18. Investors also took some comfort with report stating that IT Ministry may finalise a package of measures to boost electronics exports as early as June this year. Meanwhile, the rupee strengthened marginally against the US dollar, which provided some respite to the Indian markets.

On the global front, most of the Asian markets were trading in red, shrugging off gains seen on Wall Street as recent US-China trade tensions cooled. Optimism over easing in those tensions that had given stocks in the region a lift in the last session appeared to fade slightly, as major markets traded moderately lower.

The BSE Sensex is currently trading at 34638.28, up by 22.15 points or 0.06% after trading in a range of 34550.22 and 34754.60. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.42%, while Small cap index was up by 0.46%.

The top gaining sectoral indices on the BSE were Telecom up by 1.40%, Capital Goods up by 1.17%, Auto up by 1.14%, Industrials up by 0.91% and Metal was up by 0.77%, while Oil & Gas down by 0.60%, IT down by 0.24%, Energy down by 0.24%, FMCG down by 0.21% and PSU down by 0.10% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 3.09%, Bharti Airtel up by 2.25%, NTPC up by 1.83%, Dr. Reddys Lab up by 1.74% and Larsen & Toubro up by 1.55%. On the flip side, Asian Paints down by 1.22%, TCS down by 1.13%, SBI down by 1.10%, Adani Ports down by 1.08% and Tata Motors - DVR down by 0.66% were the top losers.

Meanwhile, in order to boost export-oriented electronics manufacturing in India, the IT Ministry may finalise a package of measures as early as June this year. These set of measures, that are expected to precede the new overarching national electronics policy currently being crafted, will aim at improving the ease of doing business and removing impediments faced by companies in exporting to overseas markets.

One of the proposals under discussion pertains to streamlining the procedure and increasing the timelines allowed to exporters to bring in for servicing or repair an electronics product that has been sold. The idea behind such a step up in making packages is to give competitiveness to the manufacturers, in not only producing items for the domestic market, but also for exports in major markets globally.

The Ministry is of the view that the best and sustainable way to grow electronics exports is to raise competitiveness of manufacturers. So, the package of measures being worked out will look at addressing the various issues that are hurting competitiveness. Currently, India exports electronic products worth $6.5 billion in a year, and this is the segment which is growing at a faster rate to export $10 billion at the earliest. 

The CNX Nifty is currently trading at 10522.85, up by 6.15 points or 0.06% after trading in a range of 10490.55 and 10558.60. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Bajaj Finserv up by 3.22%, Bajaj Auto up by 3.20%, Bajaj Finance up by 2.45%, Bharti Airtel up by 2.28% and Dr. Reddys Lab up by 1.85%. On the flip side, Ultratech Cement down by 2.39%, Bharti Infratel down by 1.90%, Indian Oil Corp. down by 1.88%, HPCL down by 1.58% and Asian Paints down by 1.44% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 27.93 points or 0.12% to 22,974.44, Taiwan Weighted decreased 27.47 points or 0.25% to 10,938.73, Shanghai Composite decreased 14.77 points or 0.46% to 3,199.07 and FTSE Bursa Malaysia KLCI decreased 2.91 points or 0.16% to 1,850.67.

On the flip side, Jakarta Composite increased 77.02 points or 1.34% to 5,810.88.

Hong Kong and South Korean markets were shut for Buddha’s Birthday.